India’s largest lender, the State Bank of India (SBI) is set to increase its base rate by 25 basis points, the Business Standard reported Monday. According to the report, the SBI is set to increase its base rate by 0.25 percent before the Reserve Bank of India’s annual policy review schelduled for May 3.
SBI’s base rate, the benchmark rate for all loans, stands at 8.25 percent. This is the lowest among major banks considering that most public sector banks have set their base rates at 9.5 percent.
ICICI Bank, the largest private sector lender, has a base rate of 8.75 percent.
Quoting a top offical of the SBI, the report said the largest lender in the country was “looking at revising the base rate” and the “need to increase it as the cost of funds has gone up”.
“The decision will be taken in the asset-liability committee meeting this month,” the official was quoted by the report who added this was necessary to protect net interest margins (NIMs) and that a 25 basis points rate hike was a possibility.
Earlier, banks across the country had resisted a rate hike since RBI’s policy rate hike of 25 bps in mid-March. However, with inflation hovering around 9 percent, more hikes in policy rates are expected, the Business Standard reported.